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Self-Assessment Tax, Tax Compliance

Changes to basis period: How will this affect you?

Changes to basis period: How will this affect you?
Simone Lyons

By Simone Lyons

18 Sep 2023

What is the basis period?

A basis period is the date that you as a self-employed individual or your partnership prepare accounts to, e.g., 30 September 2022, 31 December 2022, 31 March 2023, 5 April 2023.

For Self-Assessment you would historically be taxed on the profits/ share of profits for the accounting period that ends within the tax year, so for a 31 December 2022 year-end, this would be taxed in your 22/23 tax return because the year-end falls in that tax year.

If your basis period is NOT either 31 March 2023 or 5 April 2023 then please read further.

What is changing?

Starting with year ended 5 April 2024 everyone will be taxed on profits/ share of profits to 31 March/ 5 April 2024 irrespective of the accounting year end for your business.

For the year of change, this means you will be taxed on more than 12 months of profits. HMRC have put special provisions in place allowing you to spread the extra tax liability over five years to assist with the additional tax burden.

What options do I have?

  1. You can change your accounting year end to 31 March 2024/ 5 April 2024, this is by far the simplest option and we can assist you all the way.
  2. You keep your year end as it is currently. However, every year an adjustment will need to be made when completing your self-assessment tax return to tax profits to 5 April/ 31 March. This may mean that you will need to provide us with an estimate of your profits for the additional period. We would therefore have to file based on provisional figures and then revise the tax return later once the true figures for the later accounting period are known (assuming they cannot be finalised prior to).

How can Gerald Edelman help?

We will prepare calculations showing you the impact specific to your tax return and explain the options available to you. Meet our self-assessment advisors.

Please feel free to contact our tax team if you would like further explanations in the meantime.